PUAD 662 – NATIONAL BUDGETING, SPRING 2016
Joseph J. Minarik
jminarik@gmu.edu
202-469-7816 – office
703-435-0936 – home
703-509-3244 – cell
Please e-mail to arrange appointments.
1. Course Description
This course will focus on how the national government raises revenue and spends it. That
sounds simple enough, just like your family budget – except unlike your family budget, the
participants don’t love each other. In fact, there are thousands of participants, each with
differing interests and preferences for the use of scarce resources.
How much of the economy to devote to government through taxes, and how to allocate those
revenues, are the most important decisions that political leaders at all levels of government must
make in every year. They can decide to avoid some tough choices – reforming immigration and
social security are two recent major policy choices that leaders ducked for fear of the political
consequences. But unlike some other issues, decision-makers must choose the size and
distribution of the pie every year, whether they like it or not, by commission or omission.
Budgetary choices carry large economic and political stakes. From an economic perspective, the
federal budget bottom line constitutes the nation’s fiscal policy – the primary tool for federal
elected officials to manage the economy and deliver on campaign promises to create full
employment with low inflation. The budget’s bottom line – the size of the deficit or surplus
both now and in the future – has important consequences for the growth of the economy and
for the distribution of economic resources among various interests.
Individual budgetary decisions also have important economic implications. The decision to
invest public resources in a particular area can have profound effects on private investments.
For example, the decision to provide federally subsidized flood insurance has set in motion the
settlement of beaches and other low-lying flood plains throughout the country, because home
owners, realtors and developers are indemnified from risk by federal insurance payouts.
While economically important, the budget is at its heart a political document. However officials
try to hide it, the budget reveals their underlying priorities about two important values – how
much government should extract from the economy, and which claimants deserve more or less
of the scarce resources that are raised. To raise the stakes even more, not only are resources
for public programs limited, but claims of need are virtually infinite. Generals testify about the
woeful state of military armaments and readiness with the same earnestness and drama with
which highway engineers attest to the many bridges about to collapse – and both can cite figures
denominated in trillions of dollars for the investments needed to mitigate the risks to the public
and the republic. Making tradeoffs among competing claims for limited resources is an
inherently political process. No one has figured out a magic analytic formula – on which
everyone would have to agree – to determine the relative merit of these competing claims.
Elected policymakers sometimes obfuscate about the overall bottom line to appear to provide
sufficient resources for each of the many interests that petition for budgetary largesse, but such
claims inevitably collide with the unavoidable resource constraint.
Thus, budgeting is at its heart a political process. But it is also a technical and managerial
process. Making the choices requires seemingly mind numbing processes to weigh competing
claims and ensure that all the numbers add up. The technical jargon and cost accounting
involved with budgeting at times seems to mask the underlying political stakes involved. But the
manipulation of budget concepts, accounting and processes is as infected with politics as the
actual choices that are made with those tools. Savvy interest groups have their own litanies of
budget process reforms which, while always argued as saving the republic from imminent harm,
have the fortunate side effect of just happening to benefit their own interests. Thus, for
example, it is no surprise that highway lobby organizations advocate a capital budget – a budget
structure designed to highlight and presumably more fully fund the vast inventory of perceived
unmet needs in this area.
Budget processes are not just about how we make choices, but also about how we track and
implement those choices. Legislators and Presidents alike are held accountable not just for the
choices they make but for the results (both macroeconomic and microeconomic) of the
programs and operations they fund. The execution phase of budgeting is important because it
determines how agencies, the President and the Congress ensure that actual spending is
effective, efficient and, above all else, legal.
This course will help you better understand how budget systems address these political,
economic and managerial issues. We will work together to explore the following major areas:
--The conceptual basis for the government’s role in the economy and the society
--The economic rationale for and implications of national budgeting decisions
--The political processes shaping budgetary choices
--The role played by various institutions in federal budgeting
--The design and implementation of the budget formulation and execution process at
the federal level
--Potential reforms that are proposed for changing the budgetary process
2. Course Expectations
Students will be expected to gain a conceptual understanding of the budget process in general as
well as a familiarity with key features of budget formulation and execution. Students will deal
with these issues through a combination of readings, class discussion, group projects and exams.
A series of short (two-page) essays will be required periodically to test students’ mastery of
readings and concepts. Midterm and final take-home exams will be administered.
Students will be responsible for participating in discussion of course readings each week. In
addition, students will form teams in class to complete a report on key budget policy issues.
Teams will be responsible for presenting case studies to illustrate budget trends: the implications
of health care; social security; infrastructure investment; and other components of the budget.
Grading will follow these weights:
Final exam – 35%
Midterm – 25%
Two-pager memos – 20%
Class presentation and general oral participation – 20%
2
One basic text book is assigned:
Allen Schick, Federal Budget: Policy, Politics and Process, 3rd edition (Washington, D.C.:
Brookings, 2007)
Considerable reliance will be placed on budget documents and reports issued by the U.S. Office
of Management and Budget, the Congressional Budget Office and the U.S. Government
Accountability Office which can be accessed on line at those agencies’ web sites (omb.gov;
cbo.gov; gao.gov). Three particularly useful documents are
--The GAO’s budget glossary that provides a handy definition of budgetary terms with
which you may not be familiar. (U.S. Government Accountability Office, A Glossary of Terms
Used in the Federal Budget Process (GAO-05-734SP) www.gao.gov)
--The CBO’s annual Budget and Economic Outlook (January 19, 2016) (www.cbo.gov)
--The OMB’s FY2017 Budget documents, particularly the Analytical Perspectives and the
Historical Tables (expected soon) (www.whitehouse.gov/omb)
In addition, various handouts will be provided through the University’s Blackboard. You will be
given instructions to access these materials.
Students should notify the instructor if they are unable to attend a particular class by email
either before or immediately after class. Unexplained absences will be duly noted in determining
the student’s grade.
Students will be required to complete all assignments on time. Should students be late, the
grade will be lowered by one half of a grade in deference to those students who submitted work
on time.
Plagiarism: Students must adhere to the honor code of George Mason University, including the
university’s policy on plagiarism. Using the words or ideas of anyone other than yourself, and
pretending those words are your own, constitutes serious academic dishonesty and will not be
tolerated. Any words or ideas presented in your paper which are not your own must be
properly quoted and/or cited. To guard against plagiarism and to treat students equitably,
written work may be checked against existing published materials or digital databases available
through various plagiarism-detection services. Accordingly, electronic forms of submitted
materials may be requested.
The Honor Code policy endorsed by the members of the Department of Public and
International Affairs for the types of academic work indicated below is set out in the appropriate
paragraphs:
1. Quizzes, tests and examinations: No help may be given or received by
students when taking quizzes, tests, or examinations, whatever the type or
wherever taken, unless the instructor specifically permits deviation from this
standard.
2. Course Requirements: All work submitted to fulfill course requirements is to
be solely the product of the individual(s) whose name(s) appears on it. Except
with permission of the instructor, no recourse is to be had to projects, papers,
lab reports or any other written work previously prepared by another student,
and except with permission of the instructor no paper or work of any type
3
submitted in partial fulfillment of the requirements of another course may be
used a second time to satisfy a requirement of any course in the Department of
Public and International Affairs. No assistance is to be obtained from
commercial organizations which sell or lease research help or written papers.
With respect to all written work as appropriate, proper footnotes and
attribution are required.
3. CLASS READINGS AND ASSIGNMENTS
Lecture 1, January 25, and Lecture 2, February 1 – What is a budget, anyway? Basic
concepts; structure; the state of the budget
ASSIGNMENT DUE ON THE FIRST DAY OF CLASS (OR IMMEDIATELY
THEREAFTER): Submit before the first class a brief memo (maximum two pages – this
memo will not be graded – submit to the instructor by e-mail) answering two questions: (1)
Why did you enroll in this class? (“It is required for my job” or “For career advancement” are
perfectly acceptable answers, but please elaborate so that the instructor will know better how
to meet your needs.) (2) Why do you consider this subject matter important, and / or what do
you consider intellectually interesting about it? (The answer to this question may of course in
effect be the answer to question (1).) Also, if you have a personal CV or resume readily
available, please provide it to help me to understand the background of the class.
This session will discuss the overview of the course: the criteria for shaping the government’s
role in the national economy and society. Public finance and public choice literatures will be
discussed as well as historical data comparing U.S. experience with other OECD nations. We
will discuss the differences between budgeting for federal government, states, private firms and
the family. (“Why can’t the federal government be run like a business?”) We will take a close
look at the current status of the federal budget as a motivation for the course.
High-Priority Reading:
Joseph J. Minarik, “What Is the Structure of the Budget?” prepared for the National Press
Foundation – on Blackboard
Congressional Budget Office, The Budget and Economic Outlook
PBS Frontline http://www.pbs.org/wgbh/pages/frontline/tentrillion/view/
Office of Management and Budget, “Stewardship,” in Analytical Perspectives, Fiscal Year 2001
Budget http://www.gpo.gov/fdsys/pkg/BUDGET-2001-PER/pdf/BUDGET-2001-PER-4-2.pdf, box
beginning on pdf page 2 (printed page number 18)
Bipartisan Policy Center, Restoring America’s Future, “Executive Summary,” “Summary of
Recommendations”
http://bipartisanpolicy.org/sites/default/files/BPC%20FINAL%20REPORT%20FOR%20PRINTER%2
002%2028%2011.pdf
ASSIGNMENT due on the date of Lecture 3: Before the class, each student will play a
“budget game” to familiarize ourselves with federal budget choices.
http://crfb.org/stabilizethedebt/ Imagine that you work for a Member of Congress. Write a
two-page memo for your boss (submitted to the instructor by e-mail), discussing the lessons
you have learned about what it will take to close the fiscal gap discussed in the movie that is
assigned above, informed by playing the budget game.
4
Lecture 3, February 8 – Macrobudgeting: The Economic Effects of the Federal
Budget
Continuing from the previous classes, discussion will place the economic role of the federal
budget in perspective, including a primer on macroeconomics and the role of fiscal policy in
influencing macroeconomic performance. Recent historical experiences and models of long-term
economic outcomes will also be discussed.
High-Priority Reading:
Van Doorn Ooms et. al., The Federal Budget and Economic Management – Blackboard
Congressional Budget Office, The Budget and Economic Outlook
GAO, Federal Debt: Frequently Asked Questions
http://www.gao.gov/special.pubs/longterm/debt/index.html
Alan Blinder on “Job-Killing Spending”
http://online.wsj.com/article/SB10001424052702303635604576392023187860688.html
John Hayward, “How Government Spending Kills Jobs”
http://www.humanevents.com/2011/06/21/how-government-spending-kills-jobs/
Suggested Reading:
Alan Auerbach, “American Fiscal Policy in the Post-War Era: An Interpretative History” –
Blackboard
Office of Management and Budget, Analytical Perspectives, Fiscal Year 2017, “Interactions Between
the Economy and the Budget”
Benjamin Friedman, “Deficits and Debt in the Short and Long Run”
http://www.nber.org/papers/w11630.pdf?new_window=1
Carlo Cottarelli, et.al., “Default in Today’s Advanced Economies: Unnecessary, Undesirable and
Unlikely” (Washington, D.C.: IMF, 2010)
http://www.imf.org/external/pubs/ft/spn/2010/spn1012.pdf
ASSIGNMENT due on date of Lecture 4: Deficits exploded seven years ago to the highest
levels ever recorded in peacetime; but some argue now that the deficit is declining and the
urgency of the problem is reduced, if not eliminated. Assume you work for a Member of
Congress, and write a memo discussing whether the current deficit is “too high,” “two low” or
“just right” for now. In your answer identify the economic risks entailed in running high deficits
now and the risks involved with cutting deficits to bring about a balanced budget over the near
term. How should your boss balance these risks?
Lecture 4, February 15 - Assessing Long-Term Commitments and Fiscal Risks
Session will explore how to think about long-term commitments in the federal budget. Longterm budget models will be examined to ascertain the nature of the long-term exposures in the
federal budget. New approaches for measuring and presenting those commitments in federal
budgeting will be assessed. Potential linkages between federal budgeting and accounting will be
examined to test whether additional value could be realized from the integration of these two
financial disciplines.
5
High-Priority Reading:
Bipartisan Policy Center, Restoring America’s Future
http://bipartisanpolicy.org/sites/default/files/BPC%20FINAL%20REPORT%20FOR%20PRINTER%2
002%2028%2011.pdf (sections on health care and Social Security)
Congressional Budget Office, The 2015 Long-Term Budget Outlook, June 16, 2015
https://www.cbo.gov/publication/50250
The National Commission on Fiscal Responsibility and Reform, Moment of Truth, December,
2010
http://www.fiscalcommission.gov/sites/fiscalcommission.gov/files/documents/TheMomentofTruth
12_1_2010.pdf
Henry J. Aaron, “How to think about the U.S. Budget Challenge,” Journal of Policy Analysis and
Management (2010)
http://www.brookings.edu/~/media/research/files/papers/2010/7/27%20budget%20challenge%20a
aron/0727_budget_challenge_aaron
Leonard Burman, et. al. “Catastrophic Budget Failure,” paper presented to the Conference on
America’s Looming Fiscal Crisis, Los Angeles, January 15, 2010
http://www.urban.org/UploadedPDF/1001564-CBF-NTJ.pdf
Committee for Economic Development, Quality, Affordable Health Care For All
http://www.ced.org/images/library/reports/health_care/report_healthcare07.pdf
Suggested Reading:
Paul Posner and Irene Rubin, “Budgeting for the Long Term.”
GAO, Accrual Budgeting: Useful in Certain Areas But Does Not Provide Sufficient Information for
Reporting on the Nation’s Long Term Fiscal Challenge, GAO-08-206, 2007.
GAO, Fiscal Exposures: Improving the Budgetary Focus on Long-Term Costs and
Uncertainties, GAO-03-213 (Washington, D.C.: Jan. 24, 2003).
Alan M. Jacobs, “The Politics of When: Redistribution, Investment and Policy Making for the
Long Term,” British Journal of Political Science 38 (2008), pp. 193-220.
R. Douglas Arnold, “The Politics of Reforming Social Security,” Political Science Quarterly
Volume 113 Number 2 1998 – Blackboard
Lecture 5, February 22 – Not All Money Is Green: Earmarked Revenues, Trust
Funds And User Fees
We will learn this week about the special challenges associated with budgeting for capital, feefunded programs and earmarked revenues. Advocates for these kinds of programs have
perennially attempted to recognize the different character of these kinds of programs by
providing for differential treatment in the budget process. This session will discuss the unique
issues associated with each, and will explore the implications of such solutions as capital budgets,
trust funds and offsetting collections for the politics and outcomes of budgeting.
High-Priority Reading:
6
OMB, Analytical Perspectives, FY 2017, Chapters on “Offsetting Collections and Offsetting
Receipts,” “Federal Investment,” “Federal Research and Development,” and “Trust Funds and
Federal Funds”
GAO, Federal Trust Funds and Other Earmarked Funds: Frequently Asked Questions (GAO-01-199SP)
Suggested Reading:
Sita Nataraj and John B. Shoven, Has The Unified Budget Undermined The Federal Government
Trust Funds? – http://www.nber.org/programs/ag/rrc/04-02ShovenDraftWP1.pdf
GAO, Federal User Fees: Key Considerations for Designing and Implementing Regulatory Fees,
2015, GAO-15-718
Assignment due on the date of Lecture 6: Write a two-page memo for your boss in
Congress: Is the Social Security Trust Fund accounting system a good institution? What, if
anything, should we do to change it?
Lecture 6, February 29 – The Politics and Process of Taxation
Discussion will focus on the composition of revenues, the implications of tax policy for
economic outcomes and for budgetary choices. Tax expenditures are among the issues that will
be considered.
High-Priority Reading:
Bipartisan Policy Center, Restoring America’s Future
http://bipartisanpolicy.org/sites/default/files/BPC%20FINAL%20REPORT%20FOR%20PRINTER%2
002%2028%2011.pdf (section on taxation)
Joseph J. Minarik, “Taxation,” The Concise Encyclopedia of Economics
http://www.econlib.org/library/Enc/Taxation.html
Joseph J. Minarik, “How Tax Reform Came About,” on Blackboard
Allen Schick, Federal Budget – Chapter 7
U.S. GAO, Understanding the Tax Reform Debate (GAO-05-1009SP)
Suggested Reading:
Sheldon Pollack, The Politics of Taxation –
http://www.buec.udel.edu/pollacks/Downloaded%20SDP%20articles,%20etc/professional%20activ
ities/APSA-98.pdf
U.S. GAO, Government Performance and Accountability: Tax Expenditures Represent a Substantial
Federal Commitment and Need to be Reexamined, (GAO-05-690)
SPRING BREAK, MARCH 7 – NO CLASS
Lecture 7, March 14 – Student Presentations
Teams of students will be asked to interpret for the class trends in the following areas:
7
--Revenues over the past 50 years
--Defense spending over the past 50 years
--Health care spending over the past 50 years
--Federal investment spending over the past 50 years
--Grants to state and local governments over past 50 years
--Income security over past 50 years
--Federal civil servant pay and benefits over past 50 years
Using the OMB Historical Tables, CBO reports and other sources, groups of students will
explain for the class the trends in nominal and real numbers as well as provide other
perspectives helping to explain reasons for the trends.
THE MID-TERM EXAM WILL BE DISTRIBUTED ON THE DATE OF LECTURE 8,
TO BE RETURNED BEFORE CLASS ON THE DATE OF LECTURE 9
Lecture 8, March 21 – The Crucible of Politics
Assessment of the political underpinnings of budgeting by exploring political trends in national
government institutions, political parties, interest groups, the media, and cultural and social
interests. The results of these trends will be linked to current pressures on the federal budget.
Models will also be presented that seek to link dimensions of political debates and interests with
policy outcomes.
High-Priority Reading:
Allen Schick, The Federal Budget: Politics, Policy and Process – Chapters 1 and 2.
Hugh Heclo, “Hyperdemocracy” – Blackboard
Anthony Downs, “Why the Government Budget is Too Small in a Democracy” – Blackboard
“Origins of the Debt Showdown,” Washington Post, August 6, 2011
http://www.washingtonpost.com/business/economy/origins-of-the-debtshowdown/2011/08/03/gIQA9uqIzI_story.html?hpid=z1
Paul Posner, Will It Take A Crisis, Pew Foundation, March, 2011
http://www.pewtrusts.org/uploadedFiles/wwwpewtrustsorg/Reports/Economic_Mobility/PosnerWill-it-Take-a-Crisis.pdf
Standard and Poor’s downgrading of U.S. Treasuries from AAA to AA+
http://www.standardandpoors.com/ratings/articles/en/us/?assetID=1245316529563
Suggested Reading:
Committee for a Responsible Federal Budget, “Deficit Reduction: Lessons From Around the
World,” (Washington, D.C., September, 2009)
8
Jens Henriksson, “Ten Lessons About Budget Consolidation” (Brussels: Bruegel Essay and
Lecture Series, 2007) – Blackboard
Lecture 9, March 28 – Performance Budgeting and Accountability; Capital
Budgeting
Discussion will focus on how budgets impact performance and implementation of programs.
Discuss approaches over the years to introduce performance assessments and measures into
budgeting. Discuss how agencies manage funds after appropriations are enacted. Oversight,
audit and evaluation will also be addressed.
High-Priority Readings:
GAO, Budget Issues: Budgeting for Federal Capital, 1996, GAO/AIMD-97-5
Allen Schick, Federal Budget, Chapter 10
Suggested readings:
CBO, Comparing Budget and Accounting Measures of the Federal Government’s Financial Condition,
December, 2006
Allen Schick, “The Road to PPB: Stages of Budget Reform” – Public Administration Review,
December, 1966 – Blackboard
OMB, Analytical Perspectives, FY 2017, Chapters on “Program Evaluation and Data Analytics” and
“Benefit-Cost Analysis”
GAO, Executive Guide: Leading Practices in Capital Decision-Making. GAO/AIMD-99-32.
December 1998
President’s Commission to Study Capital Budgeting Report, 1999
(http://clinton2.nara.gov/pcscb/report.pdf).
Paul L. Posner, Public-Private Partnerships: The Relevance of Budgeting, paper presented at
OECD Senior Budget Officers meeting, 2008 – Blackboard
Lecture 10, April 4 – The Process and Politics of Budget Formulation: The
Executive Branch; Microbudgeting: Appropriations and the Structure of the Federal
Budget Process
This topic will focus on the process of budget formulation – from both agency and central
budget office perspectives. Discussion will first center on the role and nature of the formal
institutions involved with budget formulation, including processes, requirements and
submissions. Students will become familiar with the OMB Circular A-11 – the basic guidance to
agencies to formulate their requests. The discussion will then proceed to explore the politics
behind the process – what are the incentives faced by the various players in the process and
what are some of the strategies they pursue? Discussion will include the concepts underlying the
preparation of the federal budget, including budget baselines, budget accounts, functions,
character class codes and object classes. The basic fundamentals about tracking federal
expenditures through the process will be covered. Various kinds of budget authorities will be
covered, including discretionary, mandatory, contract. Trust funds and federal funds will also be
covered. Student teams will report back on their work on budget formulation, with
presentations on the FAA, DOT and OMB roles and actions.
9
High-Priority Readings:
U.S. GAO, A Glossary of Terms Used in the Federal Budget Process (GAO-05-734SP) – read
appendices
U.S. OMB, Historical Tables, FY 2017 Budget
Allen Schick, Federal Budget, Chapters 3, 4 and 5
James True, Frank Baumgartner and Bryan Jones, “Policy Punctuations: U.S. Budget Authority,
1947-1995” – Blackboard
Joseph White, “Entitlement Budgeting versus Bureau Budgeting” – Blackboard
Charles Levine, “Organizational Decline and Cutback Management,” Public Administration Review
– Blackboard
Suggested Reading:
R. Kent Weaver, “The Politics of Blame Avoidance” Journal of Public Policy (1986), 6: 371-398 –
Blackboard
Charles Lindblom, “The science of muddling through,” Public Administration Review, 1959
http://www.archonfung.net/docs/temp/LindblomMuddlingThrough1959.pdf
Lecture 11, November 23 – The Role of the Congress
Discussion will focus on the Congressional budget and appropriations processes. How does
Congress formulate its own budget goals and how do the various institutions within Congress
work to either support or undermine the process? The discussion will focus on appropriations
committees and their roles in the process, as well as on authorization committees.
High-Priority Readings:
Allen Schick, Federal Budget, Chapters 6, 8 and 9
Gary Jacobson, “Deficit Cutting Politics and Congressional Elections,” Political Science Quarterly
108, no. 3 (1993): 375-402 – Blackboard
Jonathan Rauch, “Divided We Thrive,” New York Times, November 14, 2010
http://www.nytimes.com/2010/11/07/opinion/07rauch.html
Suggested Readings:
James Saturno, “Points of Order in the Congressional Budget Process” - Blackboard
Philip Joyce, “Congressional budget reform: The unanticipated implications for federal policy
making,” Public Administration Review, Washington: Jul/Aug 1996. Vol. 56, Iss. 4 – Blackboard
ASSIGNMENT DUE ON THE DATE OF LECTURE 12 – You are the budget adviser to
the head of a federal agency (you choose which one – an entire department, or an agency within
a department, or an independent agency). Write a two-page memo to your boss to prepare
him or her for budget formulation and submission. Explain the mission of your agency; explain
10
its strengths and its weaknesses; identify it allies and enemies in the competition for budget
funding; recount its recent budget history; and recommend goals for the new budget submission.
Lecture 12, April 18 - Budget Process and Reforms
When groups don’t like the outcomes of the budget process, they sometimes reach for budget
process reforms to change the results. In this session, we will inventory the types of process
reforms, understand their prospective impacts and explore the political prospects of serious
reform to the budget system at the national level.
High-Priority Readings:
Paul Posner, “Budget Process Reform: Waiting for Godot,” Public Administration Review,
March/April, 2009 – Blackboard
Aaron Wildavsky, “The Political Implications of Budget Reform: A Retrospective” – Blackboard
Allen Schick, Federal Budget, Chapter 11
Getting Back to Black, Report of Pew-Peterson Commission on Budget Process Reform,
November, 2010 – Blackboard
Suggested Readings:
Heritage Foundation, “10 Elements of Comprehensive Budget Process Reform, 2006” –
Blackboard
Philip Joyce and Robert Reischauer, “The Federal Line Item Veto: What it is and what it will do,”
Public Administration Review, Vol 57, No. 2 (March/April, 1997) – Blackboard
Irene Rubin, “The Great Unraveling: Federal Budgeting, 1998-2006” Public Administration Review,
July/August, 2007, Vol 67, Issue 4 – Blackboard
Lecture 13, April 25 – Intergovernmental Fiscal Relationships; the Obama Stimulus
and the States
Federal budgeting is not only about federal agencies and their employees but also entails a range
of other subsidies and tools providing subsidies, grants and loans to state and local governments
and other nonprofit and private for-profit entities. State and local governments and the national
government often jointly participate in financing public services through grants, loans and tax
expenditures as well as mandates. This discussion will examine federal budgeting for
intergovernmental programs and understand the implications for federal and state and local
finances and accountability to common taxpayers. We will assess whether the politics of federal
budgeting varies significantly for different tools of governance and how this manifests itself in
federal program design and implementation.
High-Priority Readings:
Timothy Conlan, “The Politics of Federal Grants,” Political Science Quarterly – Blackboard
GAO, State and Local Governments: Persistent Fiscal Challenges, GAO-07-1080SP, July, 2007
OMB, Analytical Perspectives FY 2017, Chapter on “Aid to State and Local Governments”
11
Robert D. Lee, Public Budget Systems, Chapter 14
Suggested Reading:
David Firestone, “Don’t Tell Anyone, But the Stimulus Worked,” New York Times
(http://www.nytimes.com/2012/09/16/opinion/sunday/dont-tell-anyone-but-the-stimulusworked.html)
Alan S. Blinder and Mark Zandi, “How the Great Recession Was Brought to an End” –
Blackboard – and criticism on e21 (http://economics21.org/blog/economists-say-interventionhelped-how-much)
Lecture 14, May 2 – Reserve for inclement weather makeup, special topics, review
FINAL EXAM – Will be distributed electronically at a mutually agreed upon time after the end
of Lecture 14, to be returned one week later.
12